Conniffe, Denis (2002) A New System of Consumer Demand Equations (NIRSA) Working Paper Series. No. 4. Working Paper. NIRSA - National Institute for Regional and Spatial Analysis.
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Official URL: http://www.nuim.ie/nirsa/research/pdf/WPS04.pdf
Abstract
This paper commences from a new indirect utility function and derives the corresponding
system of equations, relating commodity demands to prices and income, that satisfies the
constraints imposed by utility maximisation (aggregation, homogeneity, Slutsky symmetry
and negativity). As the famous linear expenditure system (LES) is a special case of this new
system, it is named the generalised Stone-Geary system (GSGS) and it incorporates a
generalisation of the ‘subsistance’ income concept to one of ‘committed’ income. However,
the GSGS is not subject to the well known limitations of the LES and it can model a
reasonably representative range of consumer behaviour. It is also relatively parsimonious in
parameters involving just 3n – 1, where n is the number of commodities. The new system has
greater ranges of theoretical validity than various systems derived from ‘flexible’ functional
forms. As with the LES, simple conditions on the parameters guarantee the validity of the
system for all variable values except, perhaps, at low incomes.
Item Type: | Monograph (Working Paper) |
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Keywords: | Consumer Demand Equations; linear expenditure system; Stone-Geary system; NIRSA. |
Academic Unit: | Faculty of Social Sciences > Economics, Finance and Accounting Faculty of Social Sciences > Research Institutes > National Institute for Regional and Spatial analysis, NIRSA |
Item ID: | 1199 |
Identification Number: | 4 |
Depositing User: | NIRSA Editor |
Date Deposited: | 22 Jan 2009 11:38 |
Publisher: | NIRSA - National Institute for Regional and Spatial Analysis |
Related URLs: | |
URI: | https://mural.maynoothuniversity.ie/id/eprint/1199 |
Use Licence: | This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here |
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